Proposals to extend fixed recoverable costs in English civil courts published

Lord Justice Jackson, the architect of the 2013 civil court cost reforms, has recommended "finishing the job" of extended FRC to all cases on the 'fast track'. His recommendations also include a new fixed cost 'intermediate' track, with a streamlined procedure for cases of modest complexity up to a value of £100,000; and a voluntary cap on recoverable costs for cases in the Business and Property Courts up to a value of £250,000.

"The purpose of the further Jackson review, and the extension of FRC, is to seek to control recoverable costs in relatively low value litigation, and thereby hopefully make the cost of litigation for claims below £250,000 proportionate to the sums in dispute," said legal costs expert Keith Levene of Pinsent Masons, the law firm behind Out-Law.com.

"The extension of FRC does not limit what a party can spend for example on lawyers' fees, leading and junior counsel fees and expert fees in order to achieve its commercial objective. But as with court costs management, the extension is intended to place a limit on potential costs exposure to an opponent, and in turn limit costs recoverable from an opponent," he said.

Fixed costs currently apply to personal injury claims below £25,000, along with certain other claims. Where fixed costs apply, the unsuccessful party will only be liable for a specific amount of costs which are fixed, regardless of the actual costs incurred by the successful party. The fixed costs which currently apply are set out in tables in the Civil Procedure Rules (CPR).

Lord Justice Jackson, who is due to retire from the Court of Appeal in spring 2018, was asked in November to further review the use of FRC and make recommendations for its extension to more types and values of litigation. Jackson had previously recommended the application of FRC to all 'fast track' claims, meaning administratively simple claims below £25,000 which can be heard in a single day; and costs budgeting for 'multi-track' cases.

In his report, Jackson said that the time was now right to extend the use of FRC beyond the fast track. However, the courts should "proceed with caution" when doing so, in order to protect access to justice, he said.

Jackson's report envisages a 'banding' system for fast-track cases, with a grid of different FRC levels set according to the complexity of the case. These levels should be reviewed every three years. Cases on the new 'intermediate' track, including many of the more straightforward cases currently heard in the lower tiers of the multi-track regime, should also be broken into four complexity bands in a similar way, again with different FRC levels applying.

'Part 8' claims would be excluded from the FRC regime as proposed by Jackson. Applications to approve settlements for children and protected parties, and costs only proceedings in the intermediate track, would however be included in the regime.

Jackson had previously indicated his support for FRC to be applied to all claims up to the value of £250,000. His report does not go as far as this, noting that recent "improvements in costs management (especially in the last one-and-a-half years) have eliminated any need to develop FRC on [that] scale".

"Nevertheless, the possibility remains of substantially extending FRC in the future, if the costs management process either fails to deliver effective control over costs or becomes unduly expensive," he said.

The report also confirms plans for a pilot of capped recoverable costs, in conjunction with streamlined procedures, for business and property cases up to £250,000 in value. It also includes draft rules. The pilot would operate on a voluntary basis, with inclusion dependent on the consent of both parties. If the pilot scheme was successful, it could then be extended to any suitable case in the Business and Property Courts, or on the business and property lists of the county court.

Finally, the report recommends limiting recoverable costs in judicial review claims by adapting and extending the protective costs rules that currently apply to environmental cases under the Aarhus Convention. Costs budgeting should be introduced in the heaviest, most complex judicial review claims, at the discretion of the judge.

The report will now be considered by the government, which will use it to inform its own proposals for reform. These will be subject to public consultation before they can be taken forward.

"The review is, in effect, Lord Justice Jackson's final step, prior to his retirement, in seeking to make costs in low value fast track cases, and the new intermediate track for cases up to £100,000, proportionate to the sums in dispute," said legal costs expert Keith Levene. "Such costs, including counsel fees, will be restricted to that determined in a grid of fees within the proposed new rules."

"The review seeks to assist SMEs in respect of relatively low commercial disputes up to £250,000. In commercial disputes with claims up to £250,000, involving factual and expert evidence and leading to, say, a one-week trial, the question will be how will such cases be pursued on a commercially viable basis if the maximum recoverable costs under the pilot scheme are at best in the region of £90,000, assuming the matter has proceeded to trial," he said.

"The introduction of FRC for relatively low value commercial claims will give rise to issues for both solicitors and clients, and require careful consideration, as should currently be the case in any event, as to the service proposed by lawyers, the service required by clients, and the potential damages recoverable, costs to be incurred and potential recoverable costs," he said.